The race for Hong Kong’s top job
started as former government adviser Leung Chun-ying said he’ll
run against former Chief Secretary Henry Tang in the March 2012
election, as the city faces a widening wealth gap and slowing
economy.

“There are rising voices from the community seeking for
change,” Leung, 57, said at a press briefing yesterday. “I aim
to make Hong Kong a more prosperous, righteous and improved
society.” The outgoing Asia Pacific chairman of London-listed
property broker DTZ Holdings Plc will challenge Tang, 59, who
announced on Nov. 26 his candidacy for the chief executive post.

Hong Kong’s economy barely grew in the third quarter, and
surging home prices and inflation have spurred protests and led
to a record-low approval rating for the government. Leung and
Tang need to win votes from a 1,200-member election committee,
some picked by China, that will select the replacement for
outgoing Chief Executive Donald Tsang.

“Leung definitely has used his grassroots upbringing to
good advantage to build a populist image,” said Willy Wo-Lap Lam, an adjunct professor of history at the Chinese University
of Hong Kong. “Tang has never been able to shake off his image
as the product of privilege, but he enjoys the support of Hong
Kong’s tycoons. Beijing will go along with the candidate who
wins the business community’s confidence.”

Tens of thousands of demonstrators marched to protest
surging home prices and inequality on July 1, the 14th
anniversary of Hong Kong’s return to Chinese rule. Hong Kong has
the widest wealth gap in Asia, according to a report by the
United Nations in 2008.

Tsang, who will step down in June after running the city
for seven years, said last month the jump in housing prices, up
70 percent since the start of 2009, has been the biggest source
of public anger. Tsang was the only candidate in the 2005
election after predecessor Tung Chee-hwa stepped down following
protests by more than 500,000 people in 2003.

‘Plastic Flowers’

Leung, the son of a policeman, worked part-time at local
food shops when studying in the U.K and said his parents earned
their living making accessories at home, a popular light-
manufacturing activity in the 1960s in Hong Kong.

“My mother assembled plastic flowers to help fund the
family, and I helped her to bring those heavy materials back
home as a primary student,” he said.

As a 34-year-old in 1988, Leung became the head of the
committee responsible for drafting the Basic Law, the city’s de
facto constitution adopted after the former British colony was
returned to China. Leung was one of the non-official members in
the Executive Council, which advises the government on major
policy issues.

Among his backers are Vincent Lo, chairman of Shanghai-
based developer Shui On Land Ltd. (272), and Hang Lung Properties Ltd.
Chairman Ronnie Chan.

‘Tong Tong’

Tang was financial secretary before becoming Hong Kong’s
second-highest ranked official, a career path that mirrored
Chief Executive Tsang. His father is Tang Hsiang Chien, who was
ranked the 40th-richest person in Hong Kong in 2010 by Forbes
Magazine. The younger Tang was the managing director at the
textile manufacturer founded by his father before he joined the
government in 2002.

Tang’s best-known policy success was to abolish duties on
wine in 2008, helping the city overtake London and New York as
the world’s biggest wine auction market. As financial secretary
in 2007, he handed out income tax rebates and property-rate
waivers, earning him the nickname of “tong tong,” a term for
sweets, from the local press.

“The chaos in Europe and U.S. economies could hit Hong
Kong hard, we need an experienced and capable helmsman to lead
us,” Joseph Yam, who steered the city through the 1997-1998
Asian financial crisis as then-head of the Hong Kong Monetary
Authority, said on Nov. 24 in declaring for Tang. Yam’s backing
echoed that from Peter Wong, chief executive officer for Asia
Pacific at HSBC Holdings Plc.

About 200 supporters attended Leung’s press conference at
the exhibition center yesterday. In contrast, Tang announced his
candidacy at the exit of Admiralty subway station, after he took
a 15-minute ride from Sham Shui Po, a district of working class
and low-income families in Kowloon. He met demonstrators there
and was forced to dash to the subway, according to the South
China Morning Post’s report.

Relationship Scandal

In the latest opinion poll, Leung had the support of 35
percent, while Tang was backed by 10 percent, according to the
University of Hong Kong’s Public Opinion Programme, which cited
a survey of more than 500 residents conducted last month.

Eastweek magazine published an interview with Tang and his
wife Kwok Yu-chin on Oct. 4, in which they were questioned about
speculation that he had an affair. He later said he “deeply
regrets” his failings, declining to give details.

“I believe the inappropriate relationship scandal has
struck my popularity,” Tang told reporters on Nov. 17. “I went
through struggles and came forth with my wife to talk about the
relationship failing in public. She forgives and accepts me, I
also hope to get the public understanding on this.”

‘Deep-Rooted’ Conflicts

Leung has been vocal about housing policy, urging the
government to resume a program to build subsidized homes that
was halted in 2002. Tang said that residents should only buy
property within their means.

Chinese Premier Wen Jiabao said in March that the city
needs to resolve “deep-rooted conflicts,” underscoring
concerns over social tension. The administration of Tsang and
Tang has posted low support ratings, close to “governance
crisis,” according to the Poll Director Robert Chung at the
University of Hong Kong.

“Only a capable chief could unite a capable team,” Tang
said during his district tour, in response to criticisms he was
part of the government with low popularity.

The committee to be formed in December that will decide the
next chief executive is elected from several sectors that
represent business and political interests, skewed in favor to
the candidate backed by Beijing, said Joseph Cheng, professor of
politics at the City University of Hong Kong.

Home prices have surged on low mortgage rates and an influx
of mainland Chinese buyers. Inflation, excluding government
subsidies, was 6.4 percent in October, the highest level since
records started being kept in 2007. The city’s economy narrowly
skirted a recession, with a 0.1 percent gain in the third
quarter from the previous three-month period, after a
contraction in April through June.